FINANCIAL ACCOUNTABILITY RELATIONSHIPS BETWEEN
DONORS AND RECIPIENTS IN THE NON-PROFIT SECTOR
John Gourdie and Judie Rees
School of Business and Administration, The Waikato Institute of Technology
Abstract
The issue of accountability in the non-profit sector and its subset of charitable
entities is an important and emerging area of research. This paper reports on
interviews held with the managers of three charitable entities operating in the
Waikato area to determine the level of accountability each required from their grant
recipients. Two of these charities were Community Trusts, the third was a gaming
charity. This study suggests that, while accountability requirements in this sector
differ from the requirements of a business model, different stakeholders within the
sector also have different accountability requirements. These differences appear to
depend, to a considerable extent, on the closeness or distance of the relationship
between provider and recipient.
Keywords: charity, accountability, non-profit, donors
Introduction
The issue of accountability in the non-profit sector and its subset of charitable
entities is an important and emerging area of research. Internationally, evidence
suggests that non profit organisations play an increasing role in national
economies (Cribb 2004; Salamon 1998; Flack &Ryan 2005) A number of
developments have occurred in New Zealand in recent times that focus on
charities and the issue of accountability. The new Charities Act 2005 establishes
the Charities Commission; the Commission has a function of educating charitable
organisations about matters of governance and management and stimulating and
promoting research about the charity sector (Charities Commission 2006). The
government implemented a joint initiative in February 2005, for the formation of an
advisory committee for the study of the New Zealand non-profit sector. This
initiative recognizes the importance of the overseas research projects initiated by
Johns Hopkins University and in particular Lester Salamon (Office for the
Community & Voluntary Sector 2005) and the need to similarly recognize the
importance of the non-profit sector in this country. Also, the New Zealand Institute
of Chartered Accountants has produced a report from its taskforce investigating
non-profit issues. This report calls for an increased involvement by accountants
with the non-profit sector and in particular the need to undertake leadership and
educative roles (NZICA 2005).
These recent government and professional initiatives point to the importance of the
non-profit sector and the timeliness of undertaking research into financial
accountability issues in this domain.
Aims
This paper initially considers what is meant by the term accountability and reflects
on the current call for increased accountability from charitable entities. Preliminary
findings from a study of financial accountability relationships between donor
organisations and non-profit sector grant recipients are then presented. The study
was prompted by media reports that some local community organisations, having
failed to account properly for grants they received, were to be declared ineligible
for further grants (This Week, Hamilton, 2005). This state of affairs suggests a
need for improved financial accountability by local non-profit organisations to the
donor organisations that fund them via charitable grants. The aims of this study
are, therefore, to contribute towards (i) identifying the issues and challenges in
accountability relationships between charitable donors and recipients and (ii)
identifying those key areas where theoretical expectations and actual practices
diverge.
Background
What is meant by accountability?
Cordery & Baskerville- Morley-Morley (2005, p2) suggest that within the charity
sector there exists a “failure to establish a widely agreed definition of
accountability”. These authors are critical of a simple stakeholder analysis that
assumes all stakeholders have similar accountability needs. Their research
identifies the complexity of the charity sector and calls for a more contextual
approach in defining accountability relationships. Using the research of Hayes
(1996) they delineate charities by typology. Types of charities range from service
providers and pressure groups to mutual aid providers. The implication here is that
a complex range of stakeholders exist with different accountabilities - “We suggest
that, in fact accountability needs to be more clearly identified with the different
stakeholder groups” (Cordery & Baskerville- Morley, 2005:9).
The Hayes 1996 classification of charity accountabilities is well established in the
charity literature and is defined as
• Fiscal accountability (ensuring the funding has been spent as agreed,
according to the appropriate rules)
• Process accountability (ensuring proper procedures have been followed to
provide value for money)
• Programme accountability (providing assurance that the charity is effective in
achieving results intended)
• Accountability for priorities (fulfilling user needs appropriately).
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The Cordery & Baskerville- Morley- Morley research clearly reiterates the early
accountability findings of Hyndman (1990), where a call is made to shift the
emphasis from financial to non-financial disclosures. This call has been answered
by both academics and the profession. In New Zealand, the accounting profession
has provided an instrument for wider accountability reporting through the
Statement of Service Performance, although this appears to be little used
(Thompson 1995).
Call for more accountability
Some New Zealand literature exists on accountability in the charity sector.
Both the Property Law and Equity Reform Committee (1979) and the Working
Party on Charities and Sporting Bodies (1989) as reported by Newberry (1994)
recommend increased accountability requirements. Newberry (1992 & 1994)
reports on accounting requirements and practices of charities in New Zealand. A
significant finding of her research was a need for greater accountability and a call
for increased government regulation and self regulation by the charities
themselves. Part of Newberry’s research investigated comparative international
regulatory requirements and made the observation that New Zealand imposes
comparatively few accountability requirements on charitable organisations.
The Accountability of Charities & Sporting Bodies Working Party, an ad hoc
working party under the auspices of the New Zealand Association of Philanthropic
Trusts, produced a report in April 1997. This report identified a lack of
accountability requirements and promoted a position of increased self regulation.
Survey research was undertaken to determine the views of a number of sporting
and charitable bodies and respective stakeholders. The results of this survey
generated the desire for increased self regulation (Accountability of Charities &
Sporting Bodies Working Party 1997)
This Accountability of Charities & Sporting Bodies Working Party report identified
the Consumers Institute as an organisation interested in the activities of the nonprofit sector (p.6). This organisation has on a number of occasion’s advocated
increased regulation and in particular the creation of the Charities Commission.
“Incredibly, there is no official regulation of charities…..This will change if, as
expected, the government establishes a Charities Commission in 2004.”
Consumers Institute (2002)
Since the 2005 introduction of the Charities Act, Baskerville 2006 has identified
commonalities in recent dishonest practice problem areas in non-profit
organisations in New Zealand and has pointed to the potential for the Charities Act
to reduce the occurrence of such activities.
In addition to these NZ discussions of non-profit sector accountability, overseas
studies have raised similar issues of concern. US studies, for example, indicate
that fraud exists with considerable frequency in the non-profit sector and appears
to be increasing at an alarming rate (McNeal & Michelman, 2006). Prominent
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frauds in this sector have raised the attention of the US Senate Finance Committee
with the appointment of the Panel on the Non Profit Sector (Strom 2005) The
Panel has made a number of far reaching recommendations including calls for
increased accountability, best practice and provisions similar to the Sarbanes
Oxley Act. A debate now exists and centres on what is the appropriate reaction to
this increase in fraudulent activity. Should non-profit organisations face the same
governance standards required of business organisations? Floch suggests that
an entire industry has emerged. “Could anyone have envisioned that an entire
industry devoted to such concerns would spring to life? That seminars articles,
research, training tools and studies would develop” (Floch, 2006:2).
Salamon and Geller (2005) conducted a US wide survey of non-profit organisations
and concluded the breakdown in accountability is significantly exaggerated. The
recent US literature therefore reflects a tension between those seeking increased
rules, governance and accountability and those who suggest the situation is
overstated and call for caution in increasing regulation.
This review of the non-profit sector accountability literature provides a background
to our empirical study of charity organisations that make grants. We are examining
what might be described under Hayes classification as the fiscal and process
accountability requirements of three New Zealand charities. Our aims are to
identify the issues faced by current charities in respect to accountability and to
place the issues within the literature dialogue. This literature dialogue suggests
accountability problems may exist and calls for contextual approach in defining
accountability relationships. We use a New Zealand contextual situation to reflect
on those areas where expectations and practices diverge.
Method
Interviews were conducted with senior staff members of prominent donor
organisations in the Waikato area. These staff members were asked to comment
on: their financial accountability expectations of grant-receiving organisations;
procedures and control mechanisms used to secure appropriate accountability by
grant recipients; their perceptions of where accountability practices fall short of
requirements; and what steps they consider necessary to reducing this
performance gap. A semi structured interview schedule was used, which included
a series of nine questions (See Appendix A). All questions were presented to the
interviewees as Powerpoint slides prior to the interview; this allowed interviewees
time to consider their responses in advance of the interview. Typically interviews
lasted between 40 minutes and 1 hour. Clarification of any unclear issues was
achieved via follow up telephone conversations. Two interviews were taped and
transcribed. Sensitivity reasons prevented the third interview form being taped
however extensive notes were made during this interview.
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All three organisations make grants in the community. Table One indicates the
size of the grants made in 2005.
Table One
Organisation
C1
C2
C3
Total Grants Allocated in 2005 $
3 million
13 million
8.7 million
Findings
The charity accountability environment
The managers interviewed all acknowledged particular characteristics of the nonprofit sector. All recognised the importance of non-profit organisations in enriching
local communities with the activities they perform. This was described by one
manager
“the vast majority of community organisations out there are doing a good job
and making a small amount of money go a huge distance” (Interviewee,C3,2006)
The voluntary nature of the non-profit organisation participants was acknowledged
and with this was a desire by the charity donors not to impede volunteers in their
activities, in particular, with unnecessary or burdensome accountability tasks.
“reality is, not everything can get done, you’re getting you know, people who
are doing things on top of their daily work, on top of bringing up families, on top of
all that stuff, and then suddenly you’ve got to complete another bloody form for the
C1 application” (Interviewee,C1,2006)
“you know, there’s a level at which you just become.....you almost effectively
block all applications by making the rigmarole and the red tape too hard.
“(Interviewee,C1,2006)
This suggests that accountability acts as a barrier or burden to non-profit
organisations. If the accountability requirements are too difficult then volunteer
community work will not be carried out. This theme is reiterated in the fact that all
three charities do not undertake an audit to ensure that recipients spend the grant
as they have proposed. The rationale for not carrying out an audit is one of cost
benefit. To undertake a genuine audit and ensure monies have been spent
correctly would involve considerable cost. The cost of the audit would not justify
the benefits gained and in particular the reduced benefits available to recipients if
monies were spent on auditing expenditure. Hayes (1996:111) identifies the issue
of the cost of accountability “while the independence of voluntary agencies is not
greatly threatened by demands for accountability, the associated costs in
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complying with this requirement may pose problems”. The charities concerned
seemed acutely aware of the real costs of imposing stringent accountability
requirements that potentially erode the donations that could be provided. One
manager explained the situation as follows:
“So, a proper audit would be us going out or getting a competent person,
you know, independently qualified, and saying....confirm that this is as per their
thing....that would be just extraordinarily expensive” (Interviewee,C1,2006)
“ You know if you’re applying for $5000 and you’re having to get $1000
worth of accountancy, quantity surveyor , engineering report type things; people
will say oh sod it, we wont bother applying” (Interviewee,C1,2006)
This would suggest the calls for increased accountability (Baskerville, 2006) should
be tempered and balanced with voice from the sector that points out increased
costs will impinge upon non-profit organisations’ ability to perform. Malloy
(2006:67) when referring to the vital role of volunteers in non-profit organisations
states “An increasing amount of time is being spent on administrative processes to
comply with legislation and other reporting accountabilities. The cost of this
detracts from the benefits that volunteers would otherwise provide directly as
service to their communities. While it is important to recognise the need for
accountability it is also important to value what volunteers do as an integral part of
communal strength and resilience”
The dual complexity of the accountability relationship (Hayes 1996) was identified
in our interviews. This centres on the requirement of grant recipient organisations
to potentially provide accountability to donors who provide resources and to clients
and members who receive services. The managers indicated and accepted that
recipients clearly saw their prime accountability responsibilities to clients and
members and not to funders. This view was put clearly by one manager
“our C3 absolutely understands that the community organisations see
themselves as accountable first of all to the community they serve not to funders..
so while we think they are accountable for the money they get we also understand
that their prime accountability is to the communities they serve” (Interviewee,
C3,2006)
The tax charitable status clearly impacts on accountability issues. For one
organisation grants are clearly recognised as donations and legal gifts. There is
clearly an understanding that a contracting process is not taking place and legally
the return of grant money cannot be demanded. This legal situation was explained
by one manager
“donations are unconditional gifts so they are very much not
contracts….legally they are an unconditional gift and you are on legally tricky
ground to ask for that back” (Interviewee, C3,2006)
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This legal interpretation has impacted in limiting the accountability regime
implemented by charity 3.
“so while we think people are accountable for the way they use our
donations we don’t do the kind of accountability , financial accountability, that the
District Health Board and the kind of auditing that would happen there”
(Interviewee, C3,2006)
This suggests that charity 3 does not see accountability in a legal sense. The
inference then is that the accountability processes adopted by the charity will be
contextually different to the accountability models used in a business context.
The degree of close community involvement reflects on how each charity sees
accountability. Two of the organisations (C1 and C3) have close links to the
Waikato district and very much regard themselves as local community funders.
The third organisation (C2), a gaming charity, provides grants to recipients
throughout New Zealand. The strength of relationship with the local community
and the power of an external stakeholder provide a point of difference in their view
of accountability. This contextual difference is important and fulfils the need
identified by Cordery & Baskerville- Morley (2005) to identify different stakeholder
groups; the implication being that different stakeholders will have different
accountability needs.
Local Community Funders – Accountability
The environment of local charity funders presents unique accountability issues.
Funders appeared reluctant to impose onerous accountability obligations on
already busy volunteers who have different accountability priorities. Furthermore
the implication that the grants are legally donations or unconditional gifts, makes a
strict business like accountability problematic to administer. These factors have
created what might be called a ‘close’ working accountability relationship. Central
to the relationship is knowledge and involvement in the local community.
Managers interviewed explained how both employees and directors interacted with
the community. Both charity funders indicated a strong relationship with their
recipient community. Visits are undertaken by charity staff and in particular
members of the charity were invited to inspect and see the projects that had been
achieved. This creates a form of social accountability, as expressed by one
manager
“We visit most organisations .., we have two donations advisors .and over a rolling
year cycle we would speak and visit to most organisations.. So that’s a form of
accountability I guess Not that we go out and say show us how you have spent
that money although that is what most people tend to do” (Interviewee,C3,2006)
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Another manager expressed a similar view
“now a number of trustees actually go out and visit granting applicants,
number of us do that, typically it’s the opening of the such and such you know its a
gala type affair, we don’t go out there with the purpose, but you go out there and
you see that the tennis courts are up and you see that the painting is on the wall”
(Interviewee,C1,2006)
A consistent theme identified by the interviewees was the frequent change of
personnel and change of residence for many of the recipient organisations. These
changes in personnel place particular difficulties on ensuring accountability
requirements are met.
“Particularly in
(Interviewee,C3,2006)
small
organisations,
people
change
all
the
time”
“you’d ring and ring and ring the person who was the president of the....or
you know, the treasurer, the secretary and she’s not here any more, she’s now
living with her family in Rotorua, and you know, you get a new committee, and to
what extent do you hold that committee responsible for the downfall of the previous
committee” (Interviewee, C1,2006)
This is an indication of how accountability is operating at a very personal, individual
and trust based level. This reiterates the concept of social accountability, that uses
‘close’ personal relationship and in a sense the requirements of accountability
come under pressure when recipient organisations change personnel.
The accountability relationship is initially developed by the use of funding
application forms. Both local funders place considerable importance on funding
application documentation. This requires applicants to provide constitutional
documentation, financial statements, budgets and quotes.
For one charity funder, if the applicant had received previous grants, then
documentation to substantiate previous expenditure was required with the new
years application. For the other funder an accountability declaration form was
required. In both cases this accountability information was required for ongoing
funding. A failure to provide the information was regarded as a breach of
relationship and would result in the unlikely payment of a further grant. This was
expressed by one manager as
“how we actually see accountability, first of all we want to operate on trust,
absolutely, but how we also see it is that we will hear if something is going astray
and the main way we have of responding to that by C3 is that the organisations are
unlikely to get donations the next year” (Interviewee,C3,2006)
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Grants to organisations applying for the first time are made with a sense of trust.
These grants are likely to be small and the concept of materiality applies. To
establish ongoing funding however, the grant recipient would need to comply with
the accountability documentation requirements. Operational staff in both local
funders appeared to go to considerable effort to follow house rules and procedures
to ensure accountability requirements are complied with.
The accountability requirements of recipients who have received large grants is
much more rigorous and requires a formal reporting procedure often by way of
personal presentation from members of the recipient organisation.
Both local funders noted that grant monies were often returned from recipients
when situations altered with respect to the funded project. This was seen as part
of the ongoing relationship necessary for accountability.
Gaming Charity - Accountability
One charity donor investigated derives income from gaming and can be described
as a gaming charity. Charities deriving income from gambling come under the
auspices of the Gambling Act 2003. One of the purposes of the Gambling Act is to
“ensure that money from gambling benefits the community” (New Zealand
Government, 2003:10). Within the Act are provisions that call for the gaming
charity to perform an “annual review of the criteria, methods, systems, and policies
it uses for considering the distribution of net proceeds from class 4 gambling” (New
Zealand Government, 2003:89) The Gambling Act makes the Department of
Internal Affairs a powerful stakeholder in the affairs of gaming charities, through its
requirement to audit these organisations.
This donor organisation (C2) had more rigorous accountability requirements than
the other organisations studied. This seems to be as a direct result of the more
stringent requirements of the Gambling Act 2003. Although the Act was passed to
“more strictly regulate licensed gambling” (Secker, 2005) its passing has led to
more rigorous accountability requirements, both for the organisation and its grant
recipients.
All aspects of C2’s activities are subject to audit, including both the grant
application process and the payment of grants. These are spelled out in the
Gambling (Class 4 Net Proceeds) Regulations 2004 (relating to gambling in pubs
and clubs).The Department of Internal Affairs provides checklists to assist
organisations in meeting their audit requirements. The manager sees achieving
audit compliance as essential, “otherwise our licence is at risk” (Interviewee, C2,
2006) Under s.58 of the Act, failure to comply will result in, at best, six months
licence suspension; at worst, licence cancellation
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To achieve this compliance, it is imperative that grant recipients’ accountability
requirements, as set out in the Act and the Regulations, are also met. S.117 (1) (b)
gives the Secretary of Internal Affairs the power to investigate and audit a grant
recipient. The C2 application form requires that “records, invoices and/or receipts,
relating to the grant, are kept in a separate file” and will “be made available for
inspection by the Department of Internal Affairs and/or the [organisation’s] auditors
on demand”.
In accordance with the Gambling Act 2003 and its accompanying regulations,
adequate documentation must be used and supplied by grant applicants. Included
in this documentation must be comparative quotations or other evidence of the
costs of the proposed undertaking. This requirement has meant that grant
applicants have had to “clean themselves up” (Interviewee, C2, 2006) The
manager has seen “a dramatic improvement in accountability” (Interviewee, C2,
2006) as a result.
In granting funding, the donor organisation places extreme importance on the
credibility of the applicant. (This credibility requirement is similar to the other
donors in the study.) In addition to the quotes or other evidence required by the
Act, financial statements (preferably audited) and minutes of at least the last two
meetings must be included with the application form. These are reviewed by C2
staff to “determine the sustainability of the [applicant] organisation” (Interviewee,
C2, 2006) Importance is placed on the applicant having internal structures in place
to ensure appropriate financial procedures will be carried out in relation to the
grant. The “calibre of the applicant’s committee members” is also taken into
account, where possible. (Interviewee, C2, 2006) Applications are cross-checked
against IRD donee lists to establish charitable status.
In common with the other organisations studied, C2 outlines its accountability
requirements in the application form and again in the letter to successful
applicants. The organisation also encourages prospective recipients to make
contact to discuss their proposals prior to the approval process. As well as giving
staff the opportunity to learn more about the organisation, its people and the
activity for which funding is sought, this gives an opportunity to discuss the
accountability requirements.
Successful applicants must produce invoices within six months of receiving their
grant. Checks are made on all recipients after six months to ensure appropriate
accountability returns have been made. Non-compliance earns the recipient “a
black mark. They won’t be considered for new funding grants.” (Interviewee, C2,
2006)
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The increased level of accountability required by this organisation has had a
downside. “Some applicants now can’t get through the system” (Interviewee, C2,
2006) because they find the form-filling difficult. Interestingly, another interviewee
commented that her organisation is now being inundated with “great wads of
invoices that weren’t needed in the past” (Interviewee, C3, 2006), probably in
response to the greater accountability required by the gaming trusts.
Another significant area of difference in the operations of this organisation is that
the sense of “community” is not as strong. The organisation in fact serves a
number of communities in both the North and South Islands, as the majority of
grants must be made in the community where the organisation’s funds were
generated. The trustees who approve the grants are not representative of these
communities. In fact, most of the grants are made to South Island communities but
the four trustees are from the central North Island and do not have the involvement
evident in the trustees of the other organisations in this study.
The accountability requirements of C2 illustrate a number of aspects discussed in
the charity accounting literature. First, they would be classified under the Hayes
(1996) classification model as Fiscal Accountability. The Department of Internal
Affairs sets down rules that must be followed by both the charity and the recipient.
Newbury’s (1992, 1994) call for increased government regulation has been
responded to by the increased accountability required by the Gambling Act 2003. It
is our view that perhaps this increased regulation was designed to increase the
accountability of the funder rather than the recipient, but this aspect of
accountability is outside the scope of this paper. The end result has been that the
accountability of grant recipients has increased.
Cordery & Baskerville- Morley’s (2005) position that there are a range of
accountability needs is supported. The sensitive nature of C2’s source of funding
revenue (gaming proceeds) has had an impact on the level of accountability
required. Also, because of the lack of relationship between funder and recipient,
processes to ensure accountability assume more importance than the
requirements of the other funders in the study.
Problems
All three charities indicated that no current problems existed in their accountability
arrangements. This replicates the literature dialogue from the US (Salamon and
Geller, 2005) that identifies a tension between those seeking additional
accountability (Baskerville, 2006) and the charities who do not perceive a problem.
The nature of problems differs again between the local funders and the gaming
charity. The local funders noted that small problems had occurred in the past
where fraud had occurred in the recipient organisation. Some effort was made to
recover funds and restrictions were placed on further funding. In one fraud situation
identified, the essential theme seemed to be ensuring the fraudulent organisation
had recovered and was operationally sound; once assured of this the charity
funder was eager to establish relationship and provide urgently needed funding.
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For local funders, it is important to note the interesting difference between (i) what
would seem to be a minimal accountability environment in terms of our normal
(business-orientated) expectations of reporting, monitoring, audit etc. and (ii) the
organisations’ views that accountability is operating well. This again reiterates how
local charity funders see accountability operating in ‘close’ working relationships;
as long as the close relationship is working well, there is perhaps less need for the
formal (more distant) business accountability mechanisms.
This may well
represent the different contextual stakeholders identified by Cordery & BaskervilleMorley, (2005). This point is can be observed in the increased accountability
arrangements of the gaming charity. Relationships with recipients are more distant
for a number of reasons. Recipients are geographically located across the country,
trustees do not have close relationships with many of the recipients and the
Gambling Act imposes additional accountability requirements. This suggest
different stakeholders with different accountability needs
Regulation 12 of the Gambling (Class 4 Net Proceeds) Regulations 2004 requires
the donor to make its “best endeavour” to recover money distributed to a grant
recipient if it transpires that the recipient was double-dipping, or if it has not used
the money for the specific purpose for which it was distributed. To assist in
detecting double-dipping C2 has collaborated with three other gaming trusts to set
up the GML (Grant Monitoring Ltd) database. Each organisation enters details
about the applications it has received; enabling a check to make sure the applicant
has not approached the other organisations for funding without disclosing this on
the application form. GML intends to expand its scope, inviting other donor
organisations to become part of the operation. The implication again is that
increased accountability mechanisms are required where close relationship is not
present.
For C2, minor problems have been experienced where it has been found that
grants have been used to fund retrospective purchases (not permitted in the
Authorised Purposes) or on items not included in the original application. Monies
spent in this way must be reimbursed to the donor. Follow-up letters are sent to
any recipients who have not met the requirements. If a recipient fails to comply,
return of the grant is requested and debt collection agents are used if necessary to
recover funds.
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Conclusion
This study conducted interviews with senior staff members of three charity donor
organisations in the Waikato area. A semi structured interview was used to
investigate each organisations view of recipient accountability and the mechanisms
used to achieve this accountability. The findings contribute towards enriching our
understanding of non-profit organisations and addresses the call made to
undertake research in this important area of economic activity (NZICA 2005)
This study has its own set of limitations. The study is limited to three organisations
in the Waikato area of New Zealand; as such, the organisations are not broadly
representative of charity donors in New Zealand. The study observed only the
accountability relationship between charity donors and recipient organisations. We
acknowledge other accountability relationships exist in particular the accountability
relationship between charity donors and their wider constituent stakeholders; this is
beyond the scope of this paper.
Environmental issues observed suggest delineation between the donor charities.
We observed local charities that provide donations strictly in the local area and a
gaming charity that makes donations across the country. For both types of charity
the accountability practices do not appear to operate in the same way as we would
expect in a business context. On the surface this would suggest accountability is
weak and supports the argument of Baskerville (2006) that additional accountability
may be necessary.
The research findings however suggest that viable
accountability mechanisms exist that are sufficient to meet the perceived needs of
funders (who don’t see problems with accountability), yet are still cost effective and
practical. These accountability mechanisms differ for each type of charity. The
mechanisms can be described as social in application and centre on stakeholder
relationship and the degree of distance or closeness in the relationship. For local
funders a close working relationship is established with the recipient.
Accountability here is linked to an ongoing relationship. The gaming charity has a
more distant relationship with its recipient stakeholders. These stakeholders are
often unknown and geographically distant; furthermore the requirements of the
Gambling Act 2003 create a distant but powerful stakeholder that is able to impose
greater accountability requirements much like those seen in the business sector.
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This Week 2005 Hamilton
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14
Appendix A
Semi Structured Interview Questionnaire:
1
Background information:
i) Name:
ii) Age of organisation:
iii) Objectives of organisation: (focus of grants)
iv) What publicity is used to notify prospective applicants of the grants that are
available?
2
Is a grant application form used?
3
Does your organisation have financial accountability requirements from successful
applicants?
i) What are your financial accountability requirements?
ii) Do they vary for the size of the grant? (timing?, multiple reports or final report)
iii) Why do you have financial accountability requirements?
4
Are financial accountability requirements outlined in the application form or other
documentation?
5
Are the financial
organisations?
6
Is a vetting process (re applicants’ ability to manage funds) undertaken on applicants
prior to the grant being made?
i) If so what vetting procedures are used?
7
What financial accountability monitoring processes are put in place when grants are
made?
i) Are audits carried out?
ii) Why?
iii) Who carries out any audits?
iv) How are the findings of the audits used?
8
What financial accountability issues (problems) arise in your relationship with
recipients?
i) What common financial accountability themes have you experienced?
ii) Are you able to quantify the scale of the problems eg 10% of grants have
problems.
iii) Can you give anonymous illustrative examples?
9
What sanctions are invoked if recipients fail to meet financial accountability
requirements?
D:\219549058.doc
accountability
requirements
further
explained
to
recipient
15